MGT101- Financial Accounting FINALTERM SOLVED PAPER

FINALTERM  EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 4)

Time: 120 min                                    Marks: 87

Question No: 1    - Please choose one

 Shares for which amount is paid by public are called  

______ shares.

       ► Paid up

       ► Authorized

       ► Bonus shares

       ► All are correct options

   

Question No: 2    - Please choose one

 Which of the following is non- profit organization?                           ► Sole proprietorship

       ► Partnership

       ► Limited company

       ►  Trust

Question No: 3    - Please choose one

 Commercial Accounting is based on:

       ► Single entry book keeping

       ► Double entry book keeping

       ► Both single and double entry book keeping

       ► Cash basis of book keeping

   

Question No: 4    - Please choose one

 An Asset that is NOT physical in nature is called

      ► Intangible Asset

       ► Liquid Asset

       ► Current Asset

       ► Fixed Asset

   

Question No: 5    - Please choose one

 Which of the following is CORRECT about the flow of recording a transaction?

       ► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and loss account—Balance Sheet 

       ► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and loss account—Balance Sheet

       ► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and loss account—Balance Sheet 

       ► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and loss account—Balance Sheet 

Question No: 6    - Please choose one

 Accounts Receivable & Inventory are the examples of: ► Current assets

       ► Liquid assets

       ► Current assets

       ► Fixed assets

       ► Capital assets

   

Question No: 7    - Please choose one

 Which of the following account will be credited in the books of XYZ Co. Ltd, if the business purchased a vehicle though cheque? ► Bank account

       ► Vehicle account

       ► Cash account

       ► Business account

       ► Bank account

   

Question No: 8    - Please choose one

 Which of the following account will be credited, if business bought goods on credit from Mr. Ali?

      ► Purchases account

       ► Mr. Ali account

       ► Cash account

       ► Sales account

   

Question No: 9    - Please choose one

 In which of the following condition a company will have positive working capital? 

      ► If current assets > current liabilities

       ► If current Assets < current Liabilities

       ► If current assets = current liabilities

       ► If current assets < current liabilities

   

Question No: 10    - Please choose one

 WhicWhich of the following is an example of direct materials cost? ► A piece of wood for the production of chair

       ► Polish and finishing material for chair

       ► A piece of wood for the production of chair

       ► Production worker’s wages

       ► Depreciation expenses

   

Question No: 11    - Please choose one

 In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

       ► Opening raw material inventory + Purchases – Ending raw material inventory

       ► Opening raw material inventory - Purchases + Ending raw material inventory

       ► Ending raw material inventory + Opening raw material inventory - Purchases

       ► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 12    - Please choose one

 What would be the value of total factory cost, if the cost of material consumed during the month is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs. 2,500?         ► Rs. 10,500

       ► Rs. 6,000

       ► Rs. 8,000

       ► Rs. 4,500

       ► Rs. 10,500

   

Question No: 13    - Please choose one

 In cost of goods sold statement the ‘cost of goods manufactured’ is equal to:       ► Total factory cost + Opening work in process – Ending work in process

       ► Total factory cost + Opening work in process + Ending work in process

       ► Total factory cost + Opening work in process – Ending work in process

       ► Total factory cost - Opening work in process + Ending work in process

       ► Ending work in process +Total factory cost – Opening work in process

Question No: 14    - Please choose one

Cost of asset	Rs. 1,00,000
Life of asset	5 years
Depreciation for each year	Rs. 5,000
Sale price after 5 years	Rs.50,000
Book value of Asset after 5 years	?

       ► Rs.25, 000

       ► Rs. 75,000

       ► Rs. 15,000

       ► Rs. 1, 00,000  

Question No: 15    - Please choose one

Particulars	Rs.
Opening stock of raw material	100,000
Closing stock of raw material	85,000
Purchases of raw material during the period	200, 000
Cost of Material Consumed	?

       ► Rs. 205,000

       ► Rs. 215,000

       ► Rs. 220,000

       ► Rs. 225,000

   

Question No: 16    - Please choose one

          Consider the following:

Beginning inventory	10 units @ Rs. 10 per unit
First purchase	35 units @ Rs. 11 per unit
Second purchase	40 units @ Rs. 12 per unit
Third purchase	20 units @ Rs. 13 per unit

Eighty units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?

       ► Rs.260

       ► Rs.232

       ► Rs.284

       ► Rs.320

   

Question No: 17    - Please choose one

 Find out the missing value of an Accounting Equation with the help of given data:

Cash	Rs.1, 00, 000
Debtors	Rs.10, 000
Other Assets	Rs. 1,000
Owner’s equity	Rs. 1, 000

        ► Rs. 12,000 liabilities

       ► Rs. 11,000 liabilities

       ► Rs. 1, 10,000 liabilities

        ► Rs. 1, 11,000 liabilities

   

Question No: 18    - Please choose one

 Bank Statement is a record of transactions between the bank and the holder of:       ► All of the given options

       ► A foreign currency account

       ► A current account

       ► A saving account

       ► All of the given options

Question No: 19    - Please choose one

 Which of the following option is TRUE about the characteristic(s) of Bad Debt?      

      ► It is a definite loss to the business

       ► It is not shown in Balance Sheet

       ► No provision is necessary for it

       ► All of the given options

Question No: 20    - Please choose one

 Consider the following data and identify the amount which will be deducted from Sundry Debtors in Balance Sheet. ► Rs. 800                              

Particulars	Rs.
Bad debts (from trial balance)	1,600
Provision for doubtful debts (old)	2,000
Current year’s provision (new)	800

       ► Rs. 400

       ► Rs. 800

       ► Rs. 2,000

       ► Rs. 2,400

Question No: 21    - Please choose one

 Which of the following entry is passed to record discount allowed in control account?

       ► Discount Allowed (Dr) and Debtors Control A/c (Cr)

       ► Discount Allowed (Dr) and Debtors A/c (Cr)

       ► Debtors Control A/c (Dr) and Discount Allowed (Cr)

       ► Debtors A/c (Dr) and Discount Allowed (Cr)

   

Question No: 22    - Please choose one

 Which of the following entry will be recorded, if a cheque deposited is dishonored by bank? ► Debtor's Account (Dr.) and Bank Account (Cr.)

       ►  Bank Account (Dr.) and Debtor's Account (Cr.)

       ► Debtor's Account (Dr.) and Bank Account (Cr.)

       ► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)

       ► Creditor's Account (Dr.) and Bank Account (Cr.)

   

Question No: 23    - Please choose one

 It is supposed that on 31^st December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs. 1600.  What amount of new provision for doubtful debts will be deducted from Sundry debtors?  Rs. 2, 400

       ► Rs. 3,600

       ► Rs. 4,000

       ► Rs. 1,600

       ► Rs. 2, 400

   

Question No: 24    - Please choose one

 Which of the following is CORRECT if depreciation is given in trial balance?

       ► All of the given options are correct

       ► It means depreciation has already been deducted from concerned asset account

       ► It will be shown as an expense in income statement only

       ► It will not be deducted from concerned asset in Balance Sheet

   

Question No: 25    - Please choose one

 The persons who sign articles and memorandum of the company and contribute in the initial share capital of the company are called: ► Shareholders

       ► Subscribers

       ► Shareholders

       ► Managers

       ► Directors

   

Question No: 26    - Please choose one

 Merchandise on hand at either the beginning or end of the reporting period is called_       ► Inventory

_________.

       ► Raw material

       ► Cost of good sold

       ► Work in process

       ► Inventory

   

Question No: 27    - Please choose one

 In which of the following auditor’s remuneration payable is shown?

       ► In balance sheet under the head of current liabilities only 

       ► In balance sheet under the head of current assets only

       ► In income statement under the administrative expense only

       ► In both balance sheet under the head of current liabilities and income statement under the administrative expense

   

Question No: 28    - Please choose one

 In which of the following interim dividend is treated?      

       ► In profit and Loss account

       ► In profit and Loss appropriation account

       ► On the asset side of the Balance Sheet

       ► In trading account 

   

Question No: 29    - Please choose one

 Which of the following documents contains rules and regulations for internal management of the company?       ► Articles of Association

       ► Memorandum of Association

       ► Articles of Association

       ► Prospectus

       ► Statutory Declaration

   

Question No: 30    - Please choose one

 Which of the following is NOT a cash inflow?

       ► Sale of fixed asset

       ► Issue of debentures

       ► Cash from business operation

       ► Purchase of fixed asset

Question No: 31    - Please choose one

 In cash flow statements, which of the following would appear as a cash outflow?      

       ► The payments for purchases made during the year

       ► A decrease in trade debtors over the course of an accounting period

       ► Money received as a result of issuing new shares

       ► Money received as result of selling fixed assets

   

Question No: 32    - Please choose one

 Which of the following statement in NOT TRUE about the limited company form of business?

       ► The limited company form of business allows ownership of the business to be spread amongst many people

       ► Shareholders can appoint professionals

       ► Shareholders are personally liable for all the liabilities incurred by the business

       ► Regular filing of information about the affairs of the company is a legal requirement

   

Question No: 33    - Please choose one

 What does a credit balance in a partner’s current account represent to a business?

       ► Current Assets

       ► Current Liability

       ► Long-term liability

       ► Share of profit

   

Question No: 34    - Please choose one

 A company declares a cash dividend to be paid to its stockholders next month. The effect of the transaction is to:      

       ► Decrease assets and liabilities.

       ► Increase assets and stockholders' equity.

       ► Decrease assets and stockholders' equity.

       ► Increase liabilities and decrease stockholders' equity.

Question No: 35    - Please choose one

 An uncollectible account receivable is also termed as:       ► Asset

       ► Asset

       ► Uncollectible asset

       ► Uncollectible accounts expense

       ► None of the given options

Question No: 36    - Please choose one

 Suppose a firm has 100 debtors, and each of them owes exactly Rs.150 at the start of June. During June each debtor has paid-off exactly Rs.100 on their account, either by cash or by cheque. What should be the revised total debtors figure? ► Rs. 5,000

       ► Rs. 5,000

       ► Rs. 9,850

       ► Rs. 25,000

       ► Rs. 14,900

Question No: 37    - Please choose one

 Credit sales appear on the __________ side of the Debtors control account.

       ► Left side or credit

       ► Left side or debit

       ► Right side or debit

       ► Right side or credit

Question No: 38    - Please choose one

 The financial year of Atif Brothers & Co. is closed on June 30, 2009. Total cash sales are Rs. 150,000, credit sales are Rs. 180,000 and total receipts are Rs. 250,000. Credit receipts will be: ► Rs. 100,000

       ► Rs. 150,000

       ► Rs. 100,000

       ► Rs. 220,000

       ► Rs. 280,000

Question No: 39    - Please choose one

 Which of the following is usually not an accrued expense? ► Interest payable

       ► Interest payable

       ► Wages payable

       ► Taxes payable

       ► Notes payable

Question No: 40    - Please choose one

 Which of the following is NOT a financial statement? ► Audit report

       ► Balance sheet

       ► Audit report

       ► Income statement

       ► Cash flow statement

   

Question No: 41    - Please choose one

 Sunset tours has Rs.3,500 account receivable from the Del Mar Rotary. On January 20, the Rotary makes a partial payment of Rs.2,100 to Sunset Tours. The journal entry made on January 20 by Sunset Tours to record this transaction includes:

       ► A debit to the Cash Received account of Rs. 3,500

       ► A credit to the Accounts Receivable account of Rs.2,100

       ► A debit to the Cash account of Rs.1,400

       ► A debit to the Accounts Receivables account of Rs.1,400

Question No: 42    - Please choose one

 A and B entered in partnership in capital ratio of 2:3. They earned a profit of Rs.6,600 during the year. What will be the share of profit of Mr. A?      

       ► Rs.1,320

       ► Rs.2,640

       ► Rs.3,960

       ► Rs.6,600

Question No: 43    - Please choose one

 Income tax expense of Eden Corporation shows a debit balance of Rs.7,000 in its unadjusted trial balance and Rs.7,600 in adjusted trial balance. Which of the following account will be debited in adjusting entry? ► Income tax expense

       ► Income tax payable

       ► Prepaid income tax

       ► Income tax expense

       ► Income tax paid

Question No: 44    - Please choose one

 Sanders Construction sold a plant asset that originally cost Rs.80,000 for Rs.52,000 cash. If Sanders correctly reports a Rs.5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been: ► Rs.33,000

       ► Rs.23,000

       ► Rs.28,000

       ► Rs.33,000

       ► Some other amount

Question No: 45    - Please choose one

 Mr. A & B entered into a partnership invested Rs.65,000 and Rs.50,000 with an equal share in profit or loss. Markup on drawings of Mr. A is Rs.1,000 and of Mr. B is Rs.1,500. The net income for the year is Rs.55,000. What will be the amount of distributable profit? ► Rs.57,500

       ► Rs.52,500

       ► Rs.56,000

       ► Rs.56,500

       ► Rs.57,500

   

Question No: 46    - Please choose one

 Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss. Markup on capital of Mr. A is Rs.2,000 and markup on drawings of Mr. B is Rs.3,000. The net income for the year is Rs.50,000. What will be the profit share of Mr. A?       ► Rs.22,500

       ► Rs.22,500

       ► Rs.25,500

       ► Rs.27,500

       ► Rs.55,000

   

Question No: 47    - Please choose one

 Which of the following is quoted company?       ► Listed company

       ► Private Limited Company

       ► Public Limited Company

       ► Listed company

       ► Non Listed Company

   

Question No: 48    - Please choose one

 Which of the following can be utilized to issue bonus shares? ► Share premium

       ► Reserves

       ► Debentures

       ► Share premium

       ► Term finance certificate

   

Question No: 49    - Please choose one

 Which of the following can be utilized to set off any loss on revaluation? ► Revaluation reserve

       ► Capital reserve

       ► General reserve

       ► Revaluation reserve

       ► None of the given options

   

Question No: 50    - Please choose one

 Which of the following capital is required for the registration of the company? ► Authorized capital

       ► Issued capital

       ► Subscribed capital

       ► Authorized capital

       ► Reserve capital

   

Question No: 51    - Please choose one

 Which of the following capital is taken up by the general public?       ► Issued capital

       ► Issued capital

       ► Subscribed capital

       ► Authorized capital

       ► Reserve capital

   

Question No: 52    - Please choose one

 According to the statement of cash flows following are the examples of investing activities except: ► Capital invested by the owners

       ► Sales of machinery

       ► Capital invested by the owners

       ► Purchase of building for the business use

       ► Cash received from the disposal of equipment

   

Question No: 53    - Please choose one

 The financial statement that captures both the current operating result and the associated changes in the balance sheet is:

       ► Statement of retained earnings

       ► Statement of financial position

       ► Statement of cash flows

       ► Statement of changes in equity

   

Question No: 54    - Please choose one

 In statement of cash flows, all of the following items are considered as financing activity, except: ► Payment made for short term debts

       ► Cash received from issuance of shares

       ► Cash received from issuance of bonds

       ► Payment made for short term debts

       ► Collections on loans

   

Question No: 55    ( Marks: 3 )

 Mr. Hassan is a partner in a partnership firm. His capital on July 1, 2001 was Rs. 400,000. He invested further capital of Rs. 150,000 on March 01, 2002. Markup rate is @6%p.a. The financial year of such a business  is from 1^st July to 30^th June.

Required: You are required to calculate his markup on Capital at the end of 30^th June 2002.

     400000x6/100=2400

400000

   

Question No: 56    ( Marks: 5 )

 What do you mean by “Bad Debts” and “Doubtful Debts”? Distinguish between these.

Ans: Bad Debts

when we are going to sell the products on credit so our business take risk that there are some customer in market that they will never pay for stock sold to them.So,such situation in which  the amount which is due to the debetor are call bad debts       

This is a loss sustained loss for business due to risk. It is recorded in Profit and Loss Account in the period in which it is happen.

Doubtful Debts

A doubtful debt is a debt, which the business considers may not be paid

Question No: 57    ( Marks: 5 )

a.        In trial balance at June 30, 2007 10% debentures are shown at Rs.75,000 and mark up on debentures are shown at Rs.3,750. Six months debenture mark up is to be accrued. What will be the amount of total mark up on debentures show in profit and loss account?

b.      From the following information calculate cost of goods sold.

Stock opening balance	Rs.56,950
Purchases	175,750
Stock closing balance	65,020
Carriage inward	5,200
Sales	245,500

Opening stock  :                                             Rs.56,950                        

Add bpurchase:                                                 175,750

Add  Carriage inward :                                         5,200

Less Stock closing balance:                                (65020)

Cost of goods sold                =                       Rs 172,880        

Question No: 58    ( Marks: 10 )

 Prepare Bank Reconciliation Statement as on 31st March 2009 with the help of given data.

	Particulars	Rs.
1	Balance as per Cash Book (Dr.)	180,000
2	Cheques paid into Bank in March 2009 but credited by the bank in April 2009	7,900 4,500 1,300
3	Cheques issued in March 2009 but cashed in April 2009	11,000   5,800
4	Cheques entered in the Cash Book in March 2009 but paid into bank in April 2009	1,000
5	Interest allowed by the bank	2,500
6	Interest charged by the bank	500

S.No	Narration / Particulars	Withdrawals Amountnt	Deposits Amount			Balance Dr/(Cr)
	Balance as per Cash Book (Dr.)					180,000
						7900
						4500
						1300

   

Question No: 59    ( Marks: 10 )

 Listed below are selected items from the financial statements of ABC Mfg. Co. for the year ended December 31, 2007.

Note payable to Bank Al-Falah	Rs.500,000
Income taxes payable	40,000
Mortgage note payable	750,000
Accrued interest on mortgage note payable	5,000
Trade accounts payable	250,000
Unearned revenue	15,000
Accrued expenses and payroll taxes	60,000
Debenture	500,000

Other information:

1.      The note payable owed to Bank Al-Falah is due in 60 days. ABC Mfg. Co. has arranged with this bank to renew the note for an additional 24 months.

2.      The mortgage requires payment of Rs.6,000 per month. An amortization table shows that its balance will be paid down to Rs.739,000 by December 31, 2008.

3.      Debenture of Rs.150,000 is due in 180 days.

Instructions:

Using the information, prepare the current liabilities and long-term liabilities sections of a classified balance sheet at December 31, 2007.